Because of the ever faster-moving world, where customers expect their product to be on the doorstep on the day itself, it is necessary as a company to keep up with this continuous evolution.
When goods are leaving the distribution complex, there are plenty of modes of transportation such as sea, air, and road. To facilitate the processes of getting the order to the customer, SAP offers a Transport Management (TM) module, Logistics Execution (LE-TRA). A sub-module of Sales and Distribution (SD) in SAP. Sales and Distribution is the logistical module in SAP that happens to be a key component of the Enterprise Resource Planning (ERP) system. It defines the whole business process of shipping, billing, selling, and transportation of goods or services in the organization.
Transportation Management can be used for companies who want to implement transportation planning in SAP ECC as well as S/4HANA. With many years of experience in the implementation of the logistical and financial flow, PIKON can help you with optimizing processes and integrating the TM module.
Introduction to the new way of working
TM is an essential element in the logistical flow where movements of physical goods are managed. Nowadays, goods can be transported around the world through various transportation modes like road, air, and sea. In TM, you can also define modes of transport for incoming and outgoing goods movements.
After generating a sales order in SAP, it will automatically determine a route. Routes are key activities in the TM module. When you create a shipment, a route can help you with the planning of an upcoming delivery. The mode of transport is also visible in the route, where it is easy to see how long transportation takes.
Route determination in sales order will automatically be determined based on:
- Country and departure zone of delivering plant
- Country and transportation zone of ship to party
- Shipping condition from customer master
- Transportation group from material master record
Configuration needs to be done in the customizing when you want route determination automatically in the sales order.
You can also calculate costs in TM, and it efficiently keeps track of the freight costs. This can be useful for both businesses and the end consumer. The business can keep track of the transport cost through local and international routes as well as reduces the cost to keep them to a minimum. The end consumer will have the goods on time due to the TM system.
Most important functionalities in SAP TM
Transport management has plenty of modules to customize for your preferred requirements. These are standard features for TM:
Benefits of the reporting functionality
The analytic module of TM is well defined and can be used for monthly KPIs. Analytics gives you real-time information, and you can collect relevant data across different departments in the company. Data can be analyzed, and you get a better overview of your process of taking strategic decisions.
A few examples of what can be analyzed:
- Duration of transport
- Did the goods arrive on time
- Following up on transports
- Rate per carrier
- …
Customizing in SAP TM
Before the warehouse can send goods to the customer, customizing will be done in the SAP system. Customizing is the framework of your business. You have to investigate the whole flow to check if the framework will be implemented correctly. TM can be customized completely to suit your business structure and requirements.
Everything starts with a transportation planning point which is a group of employees responsible for organizing transport activities. Everything has a certain logical way of working in TM. Mode of transport, routes, and duration are examples of customizing processes to help the system determine the route.
Customizing the mode of transport is to define which kind of transport will be used. Sea is an interesting mode of transport because you have one delivery but two shipments, which makes everything trackable. Firstly, you have the Main leg, the transportation time during the sea transport. Secondly, there is Pre leg, the transport to the port by a truck or another mode of transport. With the pre-leg, a route determination can be done.
SAP TM process overview
TM process is easy and flexible to use. First, a sales order, an agreement between the organization and customer to deliver goods or services for the prices, quantities, and times, is generated. The route will be automatically determined, and TM will check how far in advance loading and freight must be reserved.
When the goods or services have to be delivered an outbound delivery is created. This is a document for triggering and monitoring the complete outbound delivery process. The shipment can only be generated when the transportation planning status is filled in.
The transportation process starts by creating a shipment. In this shipment, you can implement more outbound deliveries or sales orders. Here, some transport optimization are made to lower the freight costs.
When the shipment is created you need to fill in some details. Planning dates and times are the dates it’s expected to arrive in the company. When known, forward agent and container ID can also be filled in.
Firstly the check-in is done when the truck arrives at the company, loading start and end can be entered when loading takes place. Shipment completion will be selected when goods are ready to leave the warehouse. Planned goods issue (PGI) gets triggered, and the shipment is ready to leave the company. At this moment the shipment start is entered. After the goods arrive at the customer, the end of the shipment is entered.
The goods arrived with the customer, and the shipment has the status “shipment ended“.
What are the benefits of implementing the SAP TM module?
Every company is unique and needs a different approach, that is why the Transport Management module of SAP can be modified to your requirements. Here are a few advantages of using the TM module:
- Structured process and document flow
- Automatic determination of transport modus
- Internal transportation management system
- Possibility to receive shipment updates from carriers via EDI and update actual shipment dates in SAP
- Cost analysis
- Better visibility due to tracing tools
- KPIs can easily be found
- Different outputs can be sent automatically, such as shipping notification to the carrier/customer per email or EDI
- TM is flexible and easy to use
- Customizable to your requirements
How can PIKON help you?
With more than 30 years of experience, PIKON can help you to adapt your system landscape and maintain your migration. With proper training and support, we’ll not only put you on track but also help you to stay on the right path.
Transportation is a customized solution for your requirements with SAP ECC or S4HANA. If you want to see how it works in the SAP system, please contact us, and learn how sales and distribution work in our SAP program. We share our project experience and explain this in our program.
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If you have any questions about Transport Management in SAP, do not hesitate to request more information or leave a comment in the comments section below.
1 thought on “How does Transportation Management (TM) operate in SAP?”
Thank you for presenting such an insightful and well-detailed article on how transportation administration operates in SAP. The clear explanations and real-world examples make it effortless for readers to hold close to the intricacies of this system. It’s evident that a lot of effort has been put into developing this resource, and it serves as precious information for those navigating the world of SAP transportation management. Great job!